The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation

Esteban Garcia-Miralles

The B.E. Journal of Economic Analysis & Policy, 2020, vol. 20, issue 2, 16

Abstract: This paper extends the calibrations of Piketty and Saez (2013. “A Theory of Optimal Inheritance Taxation.” Econometrica 81 (5): 1851–86) to unveil the importance of the assumed social welfare criteria and its interplay with individual heterogeneity on optimal inheritance taxation. I calibrate the full social optimal tax rate and find that it is highly sensitive to the assumed social welfare criteria. The optimal tax rate ranges from negative (under a utilitarian criterion) to positive and large (even assuming joy of giving motives). A decreasing marginal utility of consumption does not affect the results qualitatively, given the underlying distribution of wealth and income. I also calibrate the optimal tax rate by percentile of the distribution of bequest received, as in Piketty and Saez, but accounting for heterogeneity in wealth and labor income. This leads to significant variation in the optimal tax rate among zero-bequest receivers, contrary to their finding of a constant tax rate.

Keywords: optimal inheritance taxation; social welfare function; wealth inequality (search for similar items in EconPapers)
JEL-codes: D31 D63 H21 H23 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejeap-2019-0274 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Journal Article: The Crucial Role of Social Welfare Criteria and Individual Heterogeneity for Optimal Inheritance Taxation (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejeap:v:20:y:2020:i:2:p:16:n:13

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejeap/html

DOI: 10.1515/bejeap-2019-0274

Access Statistics for this article

The B.E. Journal of Economic Analysis & Policy is currently edited by Hendrik Jürges and Sandra Ludwig

More articles in The B.E. Journal of Economic Analysis & Policy from De Gruyter
Bibliographic data for series maintained by Peter Golla ().